MPs are set for a 10% pay rise to £74,000 after David Cameron made clear he will not try to block the watchdog that sets their salaries from implementing the hike.

Downing Street said that although the Prime Minister still opposed the backdated increase, it was ultimately a matter for the Independent Parliamentary Standards (Ipsa) to determine.

Ipsa first announced the salary bump in 2013 to address complaints that MPs' pay has dropped behind the rest of the public sector. But the proposed hike was condemned by Mr Cameron as "simply unacceptable" while the rest of the public sector is restricted to 1%.

Asked about the issue last month, the Prime Minister's spokesman urged the body "to come to a different view".

But launching a final consultation on the proposals this morning, Ipsa said there appeared to be no "material" reason to change proposals for an increase from the current level of £67,000.

Unless "new and compelling evidence" emerges by the end of the month, the move will be confirmed - with the rise backdated to May 8.

TaxPayers' Alliance chief executive Jonathan Isaby said: "It's clear that Ipsa is hopelessly out of touch and not fit for purpose. The national debt is still rising and hard-pressed taxpayers are keeping their belts tight so it's totally inappropriate for these bureaucrats to recommend even higher pay for MPs.

"Ipsa spent £70,000 on a consultation which showed the public believed the current pay level to be broadly fair, yet have ignored the findings. MPs shouldn't be divorced from the same pay restraint as everywhere else in the public sector."

Downing Street pointed out that overall remuneration for ministers was frozen during the last parliament, and that Mr Cameron had already announced it will remain so until 2020, saving taxpayers £4 million. Previously ministers have accepted MP pay rises - but offset the benefit by reducing the government element of their earnings by the same amount.

The PM's spokeswoman said he was focused on areas where he had the power to bring down the cost of politics, including proposals for boundary changes to reduce the number of MPs at Westminster.

Blocking the rise for rank-and-file MPs would have required a change in the law, and with a slim majority it was far from clear whether Mr Cameron would have been able to carry a vote in the Commons.

His spokeswoman made clear he was not planning to take this route: "Throughout this process and debate, the Prime Minister has been absolutely clear that he doesn't agree with the proposed increase.

"But ultimately it is up to Ipsa as an independent body to decide MPs' pay and it is for them to make their determination."

The document issued by Ipsa stressed that due to cuts in pensions and expenses - such as a ban on claiming for evening meals - the overall package of changes will not cost taxpayers "a penny more".

The document said: "We remain of the view that it is right to increase MPs' pay to £74,000 for all the reasons we set out in December 2013 and which we summarise above.

"Subject to any new and compelling evidence arising from this review, we therefore intend to implement the determination as currently drafted, with a one-off adjustment in MPs' pay to £74,000 and subsequently linking it to changes in average UK earnings for the remainder of this Parliament."

Downing Street confirmed that, unlike in the last parliament, Mr Cameron and other ministers would benefit from the increase to MPs' pay. They have only frozen the government element of their remuneration.

Effectively Mr Cameron will receive a 5% pay rise, with his total package rising from £142,500 to £149,440.

Paul Kenny, general secretary of the GMB union, said: "We look forward to this meaning that MPs will be able to devote 100% of their working time to the interests of their constituents rather than some of them lining their pockets with second, third and fourth paid jobs outside Parliament.

"We trust that none of the MPs accepting this pay rise as public servants will have the audacity to oppose the recommendations of pay review bodies or decent pay rises for public sector workers."

Mark Serwotka, general secretary of the Public and Commercial Services (PCS) union, said: "It would be grossly hypocritical for any MP who voted for years of pay cuts for public sector workers to accept a 10% increase for themselves."

Labour backbencher John Mann said: "At a time when the Chancellor is asking every Government department to cut billions more from their budgets, and public sector employees have been offered a 1% pay increase, this decision needs stopping.

"This decision to award a massive pay increase shows that Westminster still doesn't get it, your first decision as a newly elected or re-elected MP should not be to award yourself a pay rise."

A Labour Party spokesman said: "It would feel wrong if Ipsa proposed an increase in MPs' take-home pay at a time when so many people are struggling."